Regulatory exams and intense scrutiny present challenges for today’s lenders as they work to properly execute fair lending compliance. The intense focus of the regulators, the difficulty of effectively collecting and analyzing the right data in a timely manner, and unclear standards can make fair lending compliance burdensome and complicated.

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In an attempt to minimize this burden while mitigating risks, many lenders have accumulated a variety of fair lending risk analytics tools and services to help them combat these issues, and compliance-related tasks are performed across a wider staff. However, juggling multiple fair lending tools, vendors and consultants has neither simplified nor improved the process. Comprehensive consulting services that provide a full report on the lender’s fair lending risk can take months to complete—which reduces the time that the lender has to enact changes before the CFPB, FDIC, FED or OCC issues and serves them notices.

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Many legacy tools were compliant at founding but are maintained by companies whose primary expertise is in software, not compliance. That lack of genuine understanding of complex and evolving fair lending regulation will ultimately result in functionality that does not adequately keep up with the lenders’ compliance obligations. Further, keeping all necessary staff up to date on the latest techniques can result in significant training, manual work, or additional professional services to keep up.

What are features of an ideal fair lending solution that can help lenders overcome these challenges?

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1: Implement Dynamic Redlining Analysis

Redlining has become a major concern since the CFPB announced that it would be a primary focus of their fair lending investigations. The ideal fair lending solution should make monitoring for redlining risk significantly more efficient, precise and easy to understand.

As this kind of analysis may be new to your team, find a solution developed by compliance experts, which helps automate the process so your team can spend time analyzing results rather than assembling numbers and cleansing data

2: Start with Compliance Expertise, Not Just Software Development

The ideal fair lending solution is maintained by a team steeped in regulatory compliance knowledge and who are actively participating with regulators and industry experts. This provides the best of both worlds—getting the expertise of a team with decades of experience and the speed of a dynamic fair lending solution will help you identify risks quickly so you have more time to focus on correcting potential issues.

3: Use a SaaS-Based Distribution Model

To keep as current as possible, look for Software-as-a-Service solutions, not a downloaded piece of software. This provides you with a number of key benefits, including:

Consistent & Timely Updates. HMDA and CRA peer data should be uploaded immediately following public release. New functionality can be rolled-out overnight to ensure you have the latest data and capabilities to make informed compliance decisions.

Highly Secure Infrastructure. With an ever-increasing bar for third party risk management, look for a solution, which reflects investment in higher standards for information security, control, and resilient infrastructure in which your procurement and technical teams can have confidence.

Maintenance. SaaS architecture means all the functions and software are maintained for you. This means there’s no need to download and install new patches to a local machine, saving time and money on your part. All updates are applied by the provider automatically and are live almost instantaneously.

Protection Against Data Loss. Backups of your most important compliance data are maintained so that a single server malfunction or other issue doesn’t destroy your data. This minimizes the risk of complete data loss from natural disasters, server hacks, and other events outside of a lender’s control.

4: Obtain Unrestricted Usage for Lenders

If you pay a per-seat charge for your software, you might be inclined to save money by restricting users. A solution which provides unlimited seats allows for multiple simultaneous users and collaboration. You can even engage internal and external counsel to look at findings in the same platform. This means you won’t hesitate to give access to the team member, who needs it, and no matter how many users you give access to; your subscription costs will remain the same.

Advanced Fair Lending Solutions Built by Compliance Experts

Isn’t it time that you address fair lending challenges head on by implementing the ideal fair lending solution?

Asurity Technologies began as an automated compliance product development division of Treliant Risk Advisors, a leading financial services consulting firm. It was spun out of Treliant Risk Advisors as Treliant Solutions by its investor, Temerity Capital Partners, in 2015. Following Temerity Capital Partners acquisitions of Risk Management Solutions, Inc. (RMS) and Mortgage Resources Group, LLC (MRG), Asurity Technologies was formed to combine the automated compliance solutions from Treliant Solutions, RMS, and MRG on a secure, cutting-edge technology platform. Asurity works closely with the Buckley Sandler law firm and Treliant Risk Advisors on product development and product enhancement.

About The Author

Dr. Anurag Agarwal serves as President of the RiskExec division with Asurity Technologies. Anurag is a recognized expert and a financial services industry veteran with over 20 years of experience in fair lending, Home Mortgage Disclosure Act (HMDA), Community Reinvestment Act (CRA), and related areas. During his career, Anurag has advised top 50 financial institutions in the areas of compliance, fair lending, statistical analysis, and regulatory risk management. Dr. Agarwal also serves as Senior Advisor to Treliant Risk Advisors.